FICC Focus FX Moment: Assessing Narratives That Take the Euro Past $1.20
Feb 10, 2026
Constantin Bolz, Head of G-10 FX at UBS CIO, brings macro-driven FX strategy expertise. He discusses narratives that could push the euro past $1.20. Short, sharp takes cover euro fiscal easing, ECB reactions, dollar weakness vs euro strength, pro-cyclical carry trades like NOK and AUD, and outlooks for the franc and yen.
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Euro Rally Is Both Dollar And Euro Driven
- Recent EURUSD strength is a mix of dollar weakness and euro-specific factors like European fiscal announcements.
- Global allocation shifts away from US assets amplify euro gains even without aggressive selling of dollars.
Fiscal Easing Weakens Dollar's Dominance
- Global fiscal stimulus in multiple regions reduces US exceptionalism and supports non-US assets.
- Diversification away from the dollar can weaken the dollar because it relies on constant capital inflows.
Constructive But Not Bullish Euro Outlook
- Europe shows constructive signs but expectations already price some fiscal stimulus into EURUSD.
- Upside exists if Europe surprises, but baseline is constructive rather than bullish.